The NFT market is facing a sharp decline in trading volume, according to data from NonFungible.com company.
The NFT market is in the throes of massive abandonment due to risk aversion, according to data from company NonFungible.com.
Recall that an NFT (“Non Fungible Token” or non-fungible token) is a digital security, issued by a blockchain (mainly Ethereum), and associated with a digital asset (photos, videos, etc.). Each NFT is unique and cannot be reproduced. NFTs are used in art, in the luxury industry or for figurines in sports.
A record year 2021
Just like the cryptocurrencies on which NFTs depend in one way or another, we find ourselves with a new asset class, with a new machinery, the victim of very traditional market movements. Let’s get back to the fundamentals: inflation, monetary policy shifting, free money is gone, so who is ready to invest in stocks owned by images of disguised monkeys, if we zoom in on the stretch?
You can read it in the numbers: 2021 will have marked an explosion in the sale of these assets, with a transaction amount of $ 17.6 billion of so-called “qualified” NFTs (which correspond to qualified or verified transactions according to NonFongible.com) , making the fortune of many investors, also becoming the retired or pre-retirement kitty of confirmed rap stars, most notably Ice Cube and Snoop Dogg.
But the year 2022 faces a loss of momentum in this trend. In the week of January 24, we were still at the peak of weekly NFT sales of around $ 1 billion.
Figures at the end of May low
But the market has been having a hard time since then, aside from the peak on April 25 with $ 1.2 billion traded and 412,000 sales.
For example, for the week of May 23, NonFongible.com lists the lowest figures for the NFT market for the year 2022, with $ 165 million traded and sales volume dropping to 175,000 transactions, according to this chart sent to BFM. Crypto by Gauthier Zuppinger, COO (Chief Operating Officer) of NonFungible.com.
The reason is very simple: there is a total surge of risky assets. And what could be more risky than these certificates of which few users know the true details? Second extremely negative factor: the sharp drop in the cryptocurrency ether, since the vast majority of these NFTs are denominated in this cryptocurrency and work on the Ethereum blockchain.
It is therefore difficult to find a fair value for assets whose reference currency has lost 47% since the beginning of the year, due to the strong shocks suffered on the cryptocurrency market.